Abolition of Angel Tax removes valuation based levy on startup share premiums, reshaping investor incentives and compliance obligations.
Abolition of the Angel Tax removes an anti abuse income tax provision that treated excess share premium in closely held companies as taxable Income from Other Sources when investments exceeded prescribed fair market value. The prior regime created pervasive valuation disputes, compliance burdens, and deterrence to early stage investment despite exemptions for recognised startups and certain funds. While abolition is expected to boost investor confidence and simplify fundraising, it raises transitional and regulatory questions-including treatment of prior assessments, clarity of valuation practice going forward, and interaction with other tax changes. (AI Summary)